The Initial Coin Offering (ICO) enjoyed its days of fame and glory for a year or so. At present, it has made way for its successor, the Initial Exchange Offering (IEO), to take the wheel.
The inceptive stages of the ICO were a success, with companies raising millions of dollars in a matter of minutes. As time passed, and scams multiplied, ICOs lost their flavour. Companies could not reach their soft caps and shockingly, only a meagre 2% of all announced ICOs were listed on an exchange.
The IEO is similar to an ICO in many ways – the token issuing, marketing, and verification procedures. The key differentiating factor is the platform on which the token is offered. An Initial Exchange Offering is a fundraising event in which a cryptocurrency exchange acts as a mediator between the token-issuing company and the investors.
Are IEOs here to Stay?
You might wonder if IEOs will meet the same fate as its predecessor. Will their spark eventually fizzle away into nothing? Let’s find out!
Here are some reasons why IEOs are making a mark in the cryptocurrency industry:
- The cryptocurrency exchange that hosts the IEO performs rigorous checks to verify the viability of the project. This ensures that investors find the best and companies strive to be their best, on the whole, creating higher standards for business.
- The company raising funds benefits from the exchange’s existing user base. Reputed exchanges have accredited investors who are looking for potential investments.
- The exchange handles the KYC/AML procedures on behalf of the company. This helps companies to focus on other aspects of business like marketing, business development, etc.
Launching your IEO:
The concept of an Initial Exchange Offering is very new. For this reason, there can be hesitation and uncertainty surrounding it. Understanding the way it works can help a great deal.
The following are some key points to note before you launch your IEO:
Today, an average hard cap of $5 million is the maximum. As time goes by, and the number of companies that employ this method increases, the average hard cap amount will subsequently reduce.
You can always set high goals for your business, but never forget to be rational and realistic.
Conduct an in-depth analysis of your project’s requirements and arrive at a practical amount that you can set as your fundraising goal.
Generally, a whitepaper is drafted by the project founder. This is logical as no else will possess as much information on the project than the creator himself/herself.
Your whitepaper is a representation of your vision. It is of utmost importance that the document is technically, grammatically, and practically sound before it reaches the public.
The exchange will conduct its own tests on your project’s whitepaper, so take no chances. Go overboard, but never ever be underprepared.
Minimum Viable Product
A Minimum Viable Product (MVP) is a prototype that has sufficient features in order to demonstrate the value of a project.
It is a necessity in today’s competitive world. An MVP gives your project solidity and speaks volumes when compared to a whitepaper which is only a representation of your project in words.
The MVP will provide you and the exchange with clarity and therefore increase your chances of being listed.
The whole point of the IEO is taking advantage of the reputed exchange’s user base. If your project does not pass the screening tests, then listing it on a lesser known exchange is not the solution.
This could nullify the whole purpose of IEOs. Therefore, work on improving your project to meet the exchange’s requirements or opt for an ICO instead.
There is no point in wasting your time on an exchange that is hardly recognizable. So, take the right measures to ensure your project is blameless.
The exchange conducts its own marketing but this is the bare minimum. They will only focus on their own platforms and market your project to their existing users.
Your project needs to spread far and wide in order to bring in investors. For this, you need to have your own marketing tactics, or maybe hire a team specialized in this area.
Remember that an exchange has responsibilities other than your project. So, it is your duty to conduct extensive marketing.
Your project needs continuous improvement even after its launch. Stagnation will ruin your business and all your initial efforts will be futile.
Keep yourself updated with the latest trends to incorporate into your business. Your responsibility does not stop with having your tokens listed on the exchange.
In order to maintain your status, exercise transparency with the investors, consistently review your project, and make changes for the better.
Launching your IEO in today’s atmosphere where the hype is real can help our project gain considerable recognition. Take advantage of the success of IEOs and work hard and sincere to achieve your goals. With the above points in mind, you can be on your way to building an unshakeable business empire.